Money and its various forms

            Money and its various forms



Money is any such thing which is legal, independent and widely accepted in the form of a means of exchange, loan repayment or valuation of money.Money is the circulating medium of exchange as defined by a government.

Medium of exchange

Unit of account

Store of value 

Purchasing power

These are the main functions of money.

The difference between currency and money

Currency is something that is commonly used as a means of exchange for money in a country. This includes metal coins and notes. Their currency area is limited.

Various forms of money:


  Near  money :


It is easily possible to convert such goods into money. Example Treasury Bill, Government Securities.
Called near money. It has high liquidity.


Real money:


The money prevailing in any country that is used in daily life is the real money. This money is used as the medium of exchange and general value storage of the country.


Representative currency;

It is a money that is known as a medium of exchange and a value scale but does not have its own value. The currency is supported behind any valuable metal (gold) while issued. Since the currency represents the precious metal, it is called a representative paper currency.

There are two types of this

1) Convertible paper currency: 

 The currency which can be converted into a valuable metal (silver or silver). The government is responsible for making such invoice valuable.

2)  Non-convertible paper currency: 

currency that does not change in any valuable metal . Similarly, the government does not have the responsibility to change such a valuable metal .


Bank Money:


Under this, there are such things which are operated by the bank and payment is also done by the bank. This demand is payable on the bank deposit amount. For example check, bank demand drafts, etc.

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